Debates of October 20, 2004 (day 24)

Thank you, Mr. Chairman. When we at the end of the year become aware that there is a potential loss on an account or receivable and we can reasonably estimate how much that loss might be, then we are obligated to book it, to recognize that loss at that time. We did that with this particular loan guarantee, recording a $3 million potential loss at that time. Now we already had some appropriation authority from our regular budget last year. So when we charged the $3 million to our appropriation, we were only over by $231,000. So if we hadn’t have had to book that $3 million, we would in fact have lapsed about $2.7 million last year in our FMBS appropriation or in the Executive appropriation, which includes FMBS. So that’s the answer.

Thank you, Mr. Voytilla. Ms. Lee.

So is this another case of one of those not real money things? You’re keeping it on the books. Is it a $3 million liability we are putting down, or $2.769 million we are putting in the books, or maybe it’s $3.231 million? I don’t know. Keeping it on the books there is a liability, or is that money we have paid out?

Thank you, Ms. Lee. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, as Mr. Voytilla stated, when we realized there was a potential loss, we had to build in the numbers of what we estimated that would be. The money wasn’t paid out at the time, but it had to be accounted for. In following the rules, once you make that accounted, it is a liability and has to be set off against our budgets, and we didn’t have the full appropriation amount in our budget. That is why we are coming forward with this. Thank you.

Thank you Mr. Roland. Thank you. General comments. Detail. Executive department, operations, Financial Management Board, budgeting and evaluation, not previously authorized $231,000.

Agreed.

Total for Financial Management Board Secretariat, not previously authorized, $231,000.

Agreed.

Total department, not previously authorized, $231,000.

Agreed.

Thank you. On to page 6, Education, Culture and Employment, operations expenditures, education and culture, not previously authorized, $2.247 million. Ms. Lee.

Thank you. This is another potential liability amount that we are supposed to, I think, put on the books. But reading the explanation for this it’s still quite puzzling, because it is largely, I think, for now anyway, until we know what the outcome of the litigation might be, it really is an accounting exercise to make sure that we have some funds allocated as a potential liability. But I’m just wondering why we have to do this, because it seems to me that the litigation is in such an initial stage, that we really don’t know what the final outcome might be; and why would anything like this be a liability for a certain fiscal year of 2003-2004 when it is so premature by all the evidence I have? Thank you.

Thank you, Ms. Lee. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the accounting rules that come into play here are similar, the same as what we just stated earlier. Once we become aware that there is a potential loss here, or liability, we have to account for it in the year that it occurs. When we make that accounting for it, even though the money hasn’t been spent, it is a liability and goes against our budget. Therefore, it would put us over that budget if we did not account for it, then it could be stated that we were understating our estimates. So we would run into problems around the accounting rules. This follows the accounting rules that we have to follow. Thank you.

Thank you, Mr. Roland. Ms. Lee.

Okay, thank you. Am I correct in thinking that currently the GNWT is budgeting $9.5 million as the potential liability, the settlement of this litigation, and that the department was able to find $7.253 million but it was deemed that it was short $2.247 million? So in order to top that $9.5 million we have to now appropriate this $2.247 million extra. I just want to know if I understand that correctly. Where does that $7.253 existing funds come from? Is that money that we have already allocated over the years? Thank you.

Thank you, Ms. Lee. Mr. Roland.

Thank you, Mr. Chairman. Mr. Chairman, the member is right on the process of how things go and the numbers. Where the money came from was the money would have been lapsed by the Department of Education, Culture and Employment, if it did not have to book this. Because it had to book this, it put them over the budget, and now by the shortfall that is showing here.

Thank you, Mr. Roland. Ms. Lee.

Just one last question. Mr. Chairman, does the Minister have any information about how much more we would be required to allocate for this litigation? It appears that it’s in a beginning stage, but I think there might be some information there that the Minister is aware of that would suggest that this would go multi-millions more. Thank you, Mr. Chairman.

Thank you, Ms. Lee. Mr. Roland.

Thank you, Mr. Chairman. What we have provided here is our best estimate of what we could be on the hook for and our share of what the total amount is. We’re splitting this with Nunavut, based on the agreement that was reached when Nunavut was created on the division of assets and liabilities. So this $9.5 million figure is our best estimate. Thank you.

Thank you, Mr. Roland. Detail?

Agreed.

Department of Education, Culture and Employment, operations expenditures, education and culture, not previously authorized, $2.247 million.

Agreed.

Department of Education, Culture and Employment, operations expenditures, total department, not previously authorized, $2.247 million.

Agreed.

Thank you. Can we go clause by clause now?

Agreed.

Thank you. For now, members, I’m going to defer the clauses and go to page 3, schedule.

Agreed.

Schedule, supplementary amounts appropriated for the 2003-2004 fiscal year, vote 1, operations expenditures, total supplementary appropriation for operations expenditures, $2.478 million.

Agreed.

Total supplementary appropriation, $2.478 million.

Agreed.

Thank you. At the present time we’ll go clause by clause. Clause 1.

Agreed.

Clause 2.

Agreed.

Clause 3.

Agreed.

Clause 4.

Agreed.

Clause 5.

Agreed.

Clause 6.

Agreed.

Clause 7.